South Dakota
An obscure drug discount program stifles use of federal lifeline by rural hospitals • South Dakota Searchlight
Facing ongoing concerns about rural hospital closures, Capitol Hill lawmakers have introduced a spate of proposals to fix a federal program created to keep lifesaving services in small towns nationwide.
In Anamosa, Iowa — a town of fewer than 6,000 residents located more than 900 miles from the nation’s capital — rural hospital leader Eric Briesemeister is watching for Congress’ next move. The 22-bed hospital Briesemeister runs averages about seven inpatients each night, and its most recent federal filings show it earned just $95,445 in annual net income from serving patients.
Yet Briesemeister isn’t interested in converting the facility into a rural emergency hospital, which would mean getting millions of extra dollars each year from federal payments. In exchange for that financial support, hospitals that join the program keep their emergency departments open and give up inpatient beds.
“It wasn’t for us,” said Briesemeister, chief executive of UnityPoint Health-Jones Regional Medical Center. “I think that program is a little bit more designed for hospitals that might not be around without it.”
Nationwide, only about two dozen of the more than 1,500 eligible hospitals have become rural emergency hospitals since the program launched last year. At the same time, rural hospitals continue to close — 10 since the fix became available.
Federal lawmakers have introduced a handful of legislative solutions since March. In one bill, senators from Kansas and Minnesota list a myriad of tactics, including allowing older closed facilities to reopen.
Another proposal introduced in the House by two Michigan lawmakers is the Rural 340B Access Act. It would allow rural emergency hospitals to use the 340B federal drug discount program, which Congress created in 1992.
The 340B program, named after its federal statute, lets eligible hospitals and clinics buy drugs at a discount and then bill insurance companies, Medicare, or Medicaid at market rates. Hospitals get to keep the money they make from the difference.
Congress approved 340B as an indirect aid package to help struggling hospitals stay afloat. Many larger hospitals say the cash is used for community benefits and charity care, while many small hospitals depend on the drug discounts to help cover staffing and operational shortfalls.
Currently, emergency hospitals are not eligible for 340B discounts. According to a release from U.S. Rep. Jack Bergman (R-Mich.), the House proposal would “correct this oversight.” Backers of the House bill include the American Hospital Association and the National Rural Health Association.
In Iowa, Briesemeister said the 340B federal drug discount program “can be used for tremendous good.” The small-town hospital uses money it makes from 340B to subsidize emergency services and uninsured and underinsured patients who frequent the emergency department, he said.
Chuck Grassley, Iowa’s longtime Republican senator, shepherded the Rural Emergency Hospital program into law. His spokesperson, Gillie Maddox, did not respond directly to questions about why the federal law creating rural emergency hospitals omitted the 340B program. Instead, Maddox said the designation was a “product of bipartisan negotiations.”
A survey conducted by the health analytics and consulting firm Chartis, along with the National Rural Health Association, found that nearly 80% of rural hospitals had participated in 340B and nearly 40% said they reaped $750,000 or more annually from the program.
Sanford Health, a largely rural health system headquartered in Sioux Falls, South Dakota, considered converting a handful of smaller critical access hospitals into rural emergency hospitals.
Martha Leclerc, vice president of corporate contracting for Sanford, said the system analyzed how much revenue would be lost by closing inpatient beds, which is also a requirement of the emergency hospital program, and by being unable to file for drug discounts.
In the end, she said, switching did not “make a lot of sense.”
Creative thinking needed to save rural hospitals
While many rural hospitals are clamoring for the 340B provision to be added to the rural emergency hospital program, opponents have said 340B can be a cash cow for hospitals that don’t serve enough vulnerable patients.
Nicole Longo is deputy vice president of public affairs for the Pharmaceutical Research and Manufacturers of America, the nation’s largest, most influential pharmaceutical lobbying group. She wrote in a recent blog post that hospital systems and chain pharmacies are “exploiting the program” and said patients have not benefited from the growth in the program.
In an interview, Longo said PhRMA supports rural emergency hospitals being able to access 340B because they are treating “vulnerable patients in underserved communities” and are “true safety net providers.”
PhRMA, she said, wants to encourage a thoughtful conversation about “which types of hospitals should be in the program.” Last year, PhRMA formed an unlikely pact with community health centers to create the Alliance to Save America’s 340B Program, or ASAP 340B.
Vacheria Keys, associate vice president of policy and regulatory affairs at the National Association of Community Health Centers, said, “There is a new day of openness, from all parties.”
Use of the drug discount program skyrocketed after provisions in the Patient Protection and Affordable Care Act, passed in 2010, allowed hospitals and clinics to contract with an unlimited number of retail pharmacies, such as Walgreens and CVS, which are paid a fee to dispense the discounted drugs.
Adam J. Fein, president of the industry research organization Drug Channels Institute, reports that the 340B program is the second-largest federal drug program, trailing Medicare Part D. The flow of drugs purchased under the 340B program reached $53.7 billion in 2022, about $9.8 billion more than in 2021.
In response to the exploding use of contract pharmacies, pharmaceutical manufacturers have restricted the drugs they offer at a discount through the pharmacies. That throttling is affecting rural hospitals like Labette Health, a Kansas hospital whose president asked President Joe Biden for help in dealing with the pharmaceutical companies.
Rena Conti, an associate professor of markets, public policy, and law at Boston University’s Questrom School of Business, has studied the drug discounts for years and said she has “significant worries about expanding” the 340B program.
“There is a lot of money being generated in this program that we really can’t understand exactly how much that really is and exactly who it is benefiting,” Conti said.
At the same time, said Conti, a health care economist, giving rural hospitals access to the federal drug discounts “makes sense because they are hospitals that are serving particularly vulnerable patient populations.”
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling, and journalism.
(SOUTH DAKOTA SEARCHLIGHT) – Democrats are running for 46 of South Dakota’s 105 legislative seats — leaving 56% of seats without a Democratic candidate.
That doesn’t bode well for the party ahead of November, said Michael Card, professor emeritus of political science at the University of South Dakota.
“It doesn’t put them in a position to actually put forward their ideological policy preferences and have much of a success at getting those enacted,” Card said.
In the state Senate alone, Democrats have failed to field a candidate for 22 seats, which is nearly two-thirds of the chamber. In the House, Democrats have failed to field a candidate for 38 seats, which is 54% of the chamber.
There is only one Democratic legislative primary in the state: a state Senate race in District 26, which includes the Rosebud Reservation.
There are no statewide Democratic primaries, after announced candidates for governor and U.S. House dropped out or failed to gather enough petition signatures to make the ballot, leaving one Democrat in each of those races.
Statewide candidates will have less name recognition than Republican candidates ahead of the general election, since they didn’t have primaries, Card said. In the Legislature, Card said Democrats “are guaranteeing they won’t get a majority.”
In contrast, Republicans have primary races for governor, U.S. House and U.S. Senate. Five legislative districts do not have Republican primaries, but do have Republican candidates. There is a Republican candidate running for every legislative seat, except for one House seat in District 27, which includes the Pine Ridge Reservation.
Card said there are several factors leading to poor candidate turnout among Democrats, including a self-fulfilling cycle of failure.
“A lack of winning makes fewer people willing to take a chance on running for office,” Card said. “Why run if I think I’m going to lose?”
Democrats haven’t held a statewide office since 2015, and they haven’t held a majority of either legislative chamber since 1994.
Joe Zweifel, deputy executive director of the South Dakota Democratic Party, said the organization worked “really, really hard” to convince Democrats to run for office.
“But you can’t force people to run for office,” said Zweifel, of Sioux Falls, who’s running for a legislative seat himself in District 12.
He’s heard the open seats called a “failure.” But he disagrees, choosing to focus on the Democrats who did step forward.
“We’re running quality, good candidates in those races,” Zweifel said.
The South Dakota Democratic Party hopes to build on legislative successes, such as a new law from Rep. Kadyn Wittman, D-Sioux Falls, that commits state funding to cover the family portion of reduced-price school meals.
“That specifically is a return on investment for our donors, and it shows that Democrats are doing good things for the people of South Dakota,” Zweifel said.
Wittman’s success helped inspire Democratic District 13 House of Representatives candidate Ali Rae Horsted, of Sioux Falls, to take a second run at the Legislature. Horsted ran unsuccessfully for the Senate against Sen. Sue Peterson in 2024, garnering 42% of the vote.
Horsted plans to build on that success and the name recognition she already has in the district. She hopes she’ll have “better odds” in this election, since there are two House seats for every district.
Horsted said it would better serve South Dakota if the state had a more balanced Legislature. While the latest Legislature was 92% Republican, 52% of voters in South Dakota are Republican. South Dakota has the lowest percentage of Democrats, 7.6%, in the Legislature nationwide.
“I think it’s important that people have options on the ballot,” Horsted said, “and people are able to vote for candidates that represent their values and their vision for the future of South Dakota.”
Makenzie Huber is a lifelong South Dakotan who regularly reports on the intersection of politics and policy with health, education, social services and Indigenous affairs. Her work with South Dakota Searchlight earned her the title of South Dakota’s Outstanding Young Journalist in 2024, and she was a 2024 finalist for the national Livingston Awards.
South Dakota Searchlight is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.
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From East River to West River, South Dakota communities share a common goal: creating places where people of all ages can live, work and thrive. AARP’s Domains of Livability provide a framework to help communities do just that. Through the AARP Community Challenge grant program—designed to spark quick, impactful local projects—South Dakota communities are turning big ideas into visible, people-centered improvements.
Read the South Dakota Community Challenge Grant Report, which showcases grant-funded projects across the state designed to build more livable communities.
What Are AARP’s Domains of Livability?
AARP’s approach to livable communities is rooted in eight interconnected domains that together support quality of life at every age:
- Outdoor Spaces and Buildings – Safe, accessible parks, streets and public buildings
- Transportation – Affordable, accessible options for getting around
- Housing – A range of choices that support independence
- Social Participation – Opportunities to connect, learn and have fun
- Respect and Social Inclusion – Communities that value people of all backgrounds and ages
- Civic Participation and Employment – Meaningful ways to engage and contribute
- Communication and Information – Clear, accessible ways to stay informed
- Community Support and Health Services – Access to services that support well-being
These domains work best when addressed together—something South Dakota communities are embracing.
Turning Vision into Action with Community Challenge Grants
AARP Community Challenge grants fund short-term, “quick-action” projects that can ignite long-term change. Across South Dakota, these grants have helped communities pilot ideas, build momentum and demonstrate what’s possible when residents put people first.
Here’s how local projects are bringing the Domains of Livability to life:
- Outdoor Spaces and Buildings: Communities have used grants to enhance parks, create pop-up public spaces, add benches and shade and install wayfinding signs. These improvements invite people to linger, gather, and enjoy shared spaces—supporting both physical activity and social connection.
- Transportation: Small, thoughtful transportation projects can make a big difference. Community Challenge grants have supported safer crossings, improved walkability and bikeability around key destinations and the planning or installation of transit amenities like shelters and seating—especially important for older adults and people with mobility challenges.
- Housing and Community Support: Some projects focus on helping residents age in place by improving access to information about home modification resources or by testing neighborhood-level solutions that connect people to services. These efforts strengthen independence and peace of mind.
- Social Participation and Inclusion: Murals, community events and creative placemaking projects funded by AARP grants have sparked community pride and social connection. By involving residents in design and implementation, these projects foster respect, inclusion and a strong sense of belonging across generations.
- Communication, Civic Participation and Opportunity: From hosting community conversations to creating new tools for sharing local information, South Dakota communities are using grants to engage residents in shaping their future. These efforts elevate local voices and encourage ongoing civic participation.
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